Oil prices extended their losses in early Thursday trading, driven by uncertainty surrounding the potential impact of proposed tariffs by U.S. President Donald Trump on various countries. Concerns over how these measures might affect global economic growth and energy demand weighed heavily on the market.
Brent and WTI Crude Prices Dip
Brent crude futures dropped by 23 cents, or 0.3%, settling at $78.79 per barrel as of 0135 GMT. Similarly, U.S. West Texas Intermediate (WTI) crude fell by 18 cents, or 0.2%, reaching $75.26 per barrel. This marked the fifth consecutive day of losses for Brent crude, which previously closed at $79.00, while WTI recorded its fourth straight day of declines after settling at $75.44.
Tariff Proposals Spark Uncertainty
The market’s downturn reflects apprehension over the broader economic consequences of Trump’s proposed tariffs. He stated plans to impose new tariffs on countries involved in the Russia-Ukraine conflict if no resolution is reached. Additional tariffs were proposed for the European Union, Canada, and Mexico, with the U.S. administration also considering a 10% punitive duty on China due to fentanyl shipments allegedly originating from the country.
These potential tariffs have raised concerns about a slowdown in global trade, which could reduce energy demand and exacerbate market volatility.
U.S. Oil Stockpile Estimates
Despite tariff concerns, the market’s attention also turned to U.S. oil stockpile data. According to estimates from an extended poll, U.S. crude oil inventories likely fell by 1.6 million barrels in the week ending January 17. In contrast, gasoline stockpiles were expected to rise by 2.3 million barrels, while distillate inventories likely increased by 300,000 barrels.
This data comes ahead of reports from the American Petroleum Institute and the Energy Information Administration, scheduled for release later in the day. These reports will provide further insights into supply dynamics and could influence market movements.
Market Outlook
Oil prices remain under pressure as traders grapple with geopolitical tensions, economic uncertainties, and fluctuating supply-demand dynamics. The proposed tariffs add an additional layer of complexity to the market, with analysts closely monitoring developments and their potential impact on global energy demand.
The coming weeks will be critical in determining whether oil prices can stabilize or continue their downward trend amid the current climate of uncertainty.